Digit Three Ltd v Revenue & Customs [2013] UKFTT 288 (TC) (03 May 2013)

Digit Three Ltd v Revenue & Customs [2013] UKFTT 288 (TC) (03 May 2013)

The Tribunal found that the July 2006 transactions were connected with the fraudulent evasion of VAT, as V2 intended to default on its VAT liability as part of a wider fraudulent scheme. The Tribunal further found that Mr Titheridge, director of DTL, knew or should have known that all four transactions (June and July 2006) were connected with the fraudulent evasion of VAT, based on the objective evidence, the trading history, and the uncommercial features of the transactions. Therefore, DTL was not entitled to deduct input tax on these transactions.

Citation
[2013] UKFTT 288 (TC)
Parties
Appellant: Digit Three Limited; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
03 May 2013
Procedural Posture
VAT Appeal (first Tier Tribunal Tax) / Final Judgment After Full Hearing
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, Input Tax Deduction, MTIC Fraud, Knowledge Requirement for VAT Deduction, Burden of Proof in Tax Appeals
Tax Law European Union Law VAT Fraud Input Tax Deduction MTIC Fraud Knowledge Requirement for VAT Deduction Burden of Proof in Tax Appeals

Case Brief

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Parties

Digit Three Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Appeal (first Tier Tribunal Tax) / Final Judgment After Full Hearing

Legal Issues

  1. 1 Whether the July 2006 transactions were connected with the fraudulent evasion of VAT
  2. 2 Whether the Appellant (through its director) knew or should have known that the transactions in June and July 2006 were connected with the fraudulent evasion of VAT

Ratio Decidendi

The Tribunal found that the July 2006 transactions were connected with the fraudulent evasion of VAT, as V2 intended to default on its VAT liability as part of a wider fraudulent scheme. The Tribunal further found that Mr Titheridge, director of DTL, knew or should have known that all four transactions (June and July 2006) were connected with the fraudulent evasion of VAT, based on the objective evidence, the trading history, and the uncommercial features of the transactions. Therefore, DTL was not entitled to deduct input tax on these transactions.

Court Disposition

Appeal dismissed

Orders

  • DTL's appeal against HMRC's refusal to repay input tax is dismissed.